Posts Tagged 'new homes bonus'

Our Council has the funds to spend in communities – so why isn’t it spent?

Central government gives district councils a New Homes Bonus* as an incentive to grant housing planning permissions, payable when the homes are built. Since the start of the scheme in 2011 Mid Suffolk District Council has received just over £9 million. It has spent very little of this and, when combined with recent budget underspends, means the Council has a cash reserve that is expected to rise to £10.47 million by the end of 2017/18.

The Green Group of councillors at Mid Suffolk are urging the Council to create a New Homes Bonus fund, initially £400,000, to which communities that have had housing growth can apply. Housing growth is happening now and communities must be given the funds to improve their infrastructure to deal with this.

Leader of the Green Group, Councillor Andrew Stringer said “each year we put forward proposals on how to improve quality of life for our residents and this is one such proposal. Our communities need our support as they get more and more housing growth.”

Many communities are seeing new housing developments and often need improved infrastructure (foot/cycle paths, roads, schools, health provision) alongside this – yet little or no funding is forthcoming.

Villages are being asked to improve their communities themselves yet are not given the budgets to deal with this.

Across England, different councils have different approaches. In South Lakeland in Cumbria 40% of the New Homes Bonus is used in communities where development occurs and the rest of the fund is used by the council to build their own housing. In Wychavon in Worcestershire, 40% of the fund from years 4 and 5 of funding is provided to local communities. South Northamptonshire allocates 30% for parishes and towns that have seen growth and 10% for parish and voluntary group projects.

District Councillor Rachel Eburne said “it is vital that these funds are used. This is not our money – it belongs to the residents of Mid Suffolk and we should be looking at best practice across the country on how this money can be spent in our communities for best effect.”

Notes:

*New Homes Bonus

New Homes Bonus is payable by Government on an annual basis with an amount paid for every new home built or empty home brought back into use. It was set up to encourage house building by incentivising councils for each planning permission granted. However it was also delivered in conjunction with Government reducing Revenue Support Grants to local government.

For each home, “payments are made on matching the average national council tax band of the unit built or brought back into use”(1) with an extra £350 if the home is affordable are paid each year. Of the sum payable, 80% is paid to Mid Suffolk District Council (MSDC) and 20% to Suffolk County Council. This scheme started in 2011/12 and currently the bonus is paid every year for five years. Since 2011/12, MSDC has received just over £9 million and is due to receive a further £2.027 million in 2017/18.

If a new house is built today, based on the national average of Band D council tax of £1,530 for 2016/17, Mid Suffolk will receive approximately £6,120 over the next five years – so for 100 homes built, £612,000. For every affordable house built they will receive an additional £1,750 over the next five years.

MSDC has been building up a so-called “Transformation Fund” which currently stands at £9.2 million and this is primarily funded from the New Homes Bonus.

In many other councils, New Homes Bonus is used as a fund to help communities to mitigate the impact of development in their area – that is, if a community has had development in their area (from which the district council has benefitted by receiving New Homes Bonus) they can apply for funds for projects that deal with impact of more housing.

Examples are:

Chichester District Council – £250,000 per annum provided to communities

My letter published in the East Anglian Daily Times – Wednesday 15th February 2017

Here in Mid Suffolk there are over 2,300 planning permissions granted and waiting to be built. I agree with Fiona Cairns (This won’t fix the housing crisis – Letters 11 February 2017) that this issue is in the hands of the developers however as the opposition group at the Council we have continually put forward ideas to help solve this.

Currently Mid Suffolk District Council has a fund of over £9 million which comes from New Homes Bonus. This is the money that Government gives councils for each house built and works out at approximately £6,000 per new dwelling (over a five-year period). A further £2 million will be received in 2017/18.

We are submitting an amendment to the budget for 2017/18 to request that some of this unallocated cash reserve is set aside as a fund to kick-start these developments – and that someone is hired in a “negotiator” type role to help get this done. We suggested this last year – and the year before – but the money keeps adding up year after year and the problem remains the same.